Yes, you can. Plenty of people in Ireland run a small business alongside a full-time job: the weekend wedding photographer, the developer freelancing after hours. Revenue has no issue with it, provided you register at the right time and file correctly.
This guide covers the rules, the 5,000 euro threshold, how registration works, and the question everyone asks quietly: will my employer find out? Not through payroll.
What does it mean to be on PAYE and a sole trader at the same time?
It means you have two income sources. Your employer deducts income tax, PRSI and USC from your wages through the PAYE system before the money reaches you. Your sole trade sits outside that system; nothing is deducted at source, so you settle the tax on your profits yourself through self-assessment.
Revenue treats these as separate income sources but taxes them together. Your annual tax return combines your PAYE income with your business profits and credits the tax that you already paid through your job. Citizens Information confirms you can be employed and self-employed at the same time, no special permission needed.
Is it legal to run a sole trade alongside a PAYE job?
Completely. There is no rule from Revenue stopping you, and being a sole trader does not require a separate legal entity. The trade is just you, earning money in your own name. Revenue’s guidance on what counts as a business is worth a read if you are not sure yours counts as trading.
The one place a barrier might exist is your employment contract. Check it for exclusivity clauses, conflict of interest terms, or rules about outside work on company time; freelancers in the same industry as their employer should read it twice.
When do I need to register with Revenue, and what is the 5,000 euro rule?
You must register as a self-employed person with Revenue once your net income from the sole trade exceeds 5,000 euro in a year. Net income means sales minus allowable expenses. Someone who invoices 7,000 euro but spends 2,500 euro on materials has not crossed the line.
Revenue’s self-assessment rules class you as a chargeable person when your non-PAYE income passes 5,000 euro net, or 30,000 euro gross. At that point you need to register for income tax and file a Form 11 every year.
|
Your side income |
What Revenue expects |
|
Net profit under 5,000 euro (and gross under 30,000 euro) |
Declare it through myAccount; full registration not required |
|
Net profit over 5,000 euro |
Register for income tax under self-assessment and file Form 11 |
|
Gross income over 30,000 euro |
Register for self-assessment even if your net profit is below 5,000 euro |
Trending towards the threshold in October? Don’t wait for January. Registering early saves a scramble.
How do I register as a sole trader while staying on PAYE?
Registration is done online. You will need:
- Your PPSN, which doubles as your tax reference number for the sole trade.
- A short description of the business activity and your start date.
- Access to ROS, Revenue’s online service, where self-assessed taxpayers register and file.
- A registered business name with the CRO, but only if you trade under a name that is not your own.
Nothing changes on the employment side. You stay on PAYE for your job, and you are simply also registered for self-assessment.
Do I have to tell my employer I’m a sole trader?
No, unless your contract requires it. There is no general legal duty to disclose a side business, and your employer cannot see your sole trader registration through payroll. Their payroll software only processes the employment income they pay you.
Your tax filings are confidential between you and Revenue. The only practical exception is contractual: if your contract demands disclosure of outside work, staying silent is an employment risk, not a tax one.
What records do I need to keep, and what can I deduct?
Keep the sole trade records separate from your personal finances. A separate business bank account is not mandatory, but it makes everything cleaner. Track:
- Every invoice you issue, with dates and amounts.
- A receipt for each business purchase, digital copies are fine.
- Mileage logs if you claim motor costs.
- Bank statements supporting the lot.
You can deduct allowable expenses that are wholly and exclusively for the trade: software, materials, marketing, professional fees, a reasonable share of home office costs. Our guide to claiming household expenses as a sole trader covers the apportionment. Personal spending dressed up as business expenses, fines, and the private share of mixed-use costs all stay out.
What tax will I pay on the sole trade profits?
You pay income tax on your profits at your marginal rate, and because your PAYE salary usually uses up your standard rate band, side income is often taxed at the higher rate. PRSI applies under Class S, charged at 4.2% since 1 October 2025, and USC is calculated on your combined income. The Form 11 is filed through ROS as part of your annual tax return.
For the thresholds, see how much a sole trader can earn before paying tax.
Do I need to think about VAT or a limited company?
VAT only enters the picture when your turnover approaches the registration threshold, and most side businesses never get near it. Check Revenue’s VAT registration guidance for the current limits, or our breakdown of VAT thresholds in Ireland.
A limited company becomes worth considering when profits grow, risk increases, or you want to leave money in the business. It brings more admin and CRO filings; our comparison of sole trader versus company is a good starting point.
Frequently asked questions
Do I still need to register if I earn under 5,000 euro net?
No, you do not need to register for self-assessment below that level, provided your gross non-PAYE income is also under 30,000 euro. You still have to declare the income through myAccount, and keeping records from day one makes that painless.
Will my PAYE tax credits change because I start a sole trade?
Your credits stay attached to your circumstances, not your employment status. The overall position is reconciled on the Form 11, where tax collected through payroll is credited against your total liability.
Do I need a separate business bank account?
Not legally, since a sole trader is not a separate legal entity. In practice it is the best habit for clean books, and it makes an accountant’s job faster at year end.
Do I need to register a business name?
Only if you trade under a name other than your own. “Mary Byrne” needs nothing; “Byrne Design Studio” must register the name with the CRO within one month of starting to use it.
Want help getting registered and filing on time?
Juggling a job and a side business is enough work without wrestling Revenue forms in November. We handle tax returns for sole traders, including registration, Form 11 preparation and preliminary tax, and our bookkeeping services keep the records straight all year. Get in touch today.
Disclaimer: This guide is for general information purposes only and does not constitute professional advice. Speak to a qualified accountant about your specific circumstances before acting on anything covered here.